Should the government scrap its foreign aid commitment?

Apr 20 2017

Bill Gates has hit the headlines today by warning the prime minister not to abandon the government’s 0.7 per cent spending commitment to overseas aid. This morning, I spoke to Julia Hartley-Brewer on TalkRadio about why Bill Gates is wrong.

Mr Gates is an exceptionally generous philanthropist and plans to give away almost all of his fortune over his life. This is a remarkable act of generosity and he should be praised for it. The mechanism for this giveaway is through (his own) charity, not through the aid budgets of his own or any other country. This is because he wanted ‘private-sector’ rigour to accompany the spending to ensure its effectiveness.

This approach was enough to convince the investor Warren Buffett to commit $30 billion of his own money to the Bill and Melinda Gates Foundation. Mr Buffett has elsewhere described a man called Chuck Feeney as his and Bill Gates’ hero. Mr Feeney was a billionaire who avoided paying every cent of tax he could, so that he could give it away to charitable causes more effectively than any government could. (He’s still alive, but has given away so much that he is no longer a billionaire).

So it is a pity to hear Mr Gates argue for the arbitrary 0.7 per cent ring-fence as being a symbol of ‘goodwill’ and ‘humanity’. This is to confuse inputs with desired outcomes and there is nothing inspiring or humane about shovelling taxpayers’ cash out the door as quickly as possible with little to no accountability

By basing the budget on the amount spent, rather than on what would be prudent and wise, DfID wastes billions on poorly-scrutinised projects. These projects are either massively inefficient because of the lack of funding pressure, encourage corruption in the recipient country because of the lack of oversight, or indeed show no benefits whatsoever (see page 65 of our Spending Plan). Worse still, by pegging our desire to ‘do good’ to the impulse of blindly throwing money at a problem, we incorrectly absolve ourselves of the responsibility to actually solve overseas problems.

The British public are incredibly generous with their charitable contributions, despite the high levels of taxation they are under. There is every likelihood that they would give even more if the government let them keep more of their own money. That is the sign of the goodwill and humanity Mr Gates should be praising.

Scrapping the 0.7 per cent spending requirement would be a good start towards reforming the way the UK interacts with the developing world. But in the longer-term, DFID should be scrapped and its responsibilities should be shared out between the Foreign Office, the Ministry of Defence and the Department for International Trade. Humanitarian relief, disease eradication and deep trade links should be supported. But we should move on from sacrificing taxpayers’ money on the altar of an arbitrary and damaging ring-fence.